Regulatory Compliance Seminar

October 24, 2016

Bonjour from New Orleans, where the compliance team is on-site for NAFCU's Regulatory Compliance and BSA Seminars. On October 17, 2016, the Government Accountability Office (GAO) released a report with observations of the impact Regulation D has on financial institutions and consumers. Just for context, Reg D is a Federal Reserve regulation that, in part, requires credit unions to limit certain kinds of transfers and withdrawals from savings deposits to avoid having to maintain reserves against those accounts. Many credit unions have expressed their discontent with this regulation as it appears to be as relevant and helpful as dial-in internet. Unfortunately, the findings of the GAO report are bad news for those who hoped Reg D would eventually get retired.

Mainly, the report found that numerous financial institutions faced some kind of operational burden associate with monitoring and enforcing the transaction limit. The report indicated however, that while some credit unions experience operational difficulties, members seem to be unaffected by Reg D’s transaction limit. The full report along with the highlights can be found here.

As Regulation D is unlikely to disappear overnight and the GAO report indicated most credit unions have restricted accounts, I feel it is a good time to review the transactions that count towards the Reg D limit. The regulation places a limit on non-transaction accounts such as share savings and money market accounts. See, 12 C.F.R. § 204.2. Transaction accounts, such as share checking accounts, are unaffected by this limit as the credit union must reserve against the funds in these accounts. The rule limits the number of convenient transfers that may occur on a savings account per month or statement cycle of at least four weeks to a total of six. See, 12 CFR § 204.2(d)(2). NAFCU made a helpful chart that breaks down the restricted and unrestricted transactions of savings deposits as defined by 12 C.F.R. section 204.2:

Restricted Transactions

(total of 6 per month)

Unrestricted Transactions

Transfers and withdrawals to another account of the same member at the same credit union or to a third party by means of:

Preauthorized or automatic transfer;

Telephone or fax;

Home or internet banking; or

Check, draft, debit card, or similar order payable to third parties

Transfers into the account;

Transfers to repay the member’s loans and associated expenses at the credit union; and

Transfers to another account of the same member at the same credit union or withdrawals directly to the member when made:

By mail or messenger;

At an ATM

In person; or

By telephone, when the transaction results in a check mailed to the depositor.

What happens if a member exceeds the transaction limit? There is a famous footnote in section 204.2(d)(1) that provides guidance on that matter. Footnote 4 states:

4 In order to ensure that no more than the permitted number of withdrawals or transfers are made, for an account to come within the definition of [savings deposit], a depository institution must either:

a) Prevent withdrawals or transfers of funds from this account that are in excess of the limits established by paragraph (d)(2) of this section, or

b) Adopt procedures to monitor those transfers on an ex post basis and contact customers who exceed the established limits on more than occasional basis. For customers who continue to violate those limits after they have been contacted by the depository institution, the depository institution must either close the account and place the funds in another account that the depositor is eligible to maintain or take away the transfer and draft capacities of the account. An account that authorizes withdrawals or transfers in excess of the permitted number is a transaction account regardless of whether the authorized number of transactions is actually made. For accounts described in paragraph (d)(2) of this section, the institution at its option may use, on a consistent basis, either the date on the check, draft, or similar item, or the date the item is paid in applying the limits imposed by that section.

The guidance gives credit unions with two choices, the first is to restrict transactions above the allotted number and the second is to monitor and contact offending accounts that exceed the limit more than occasionally. This begs the question, what does an “occasional basis” mean? While not an absolute rule, the Federal Reserve has opined that if a member exceeds the limitations more than three times in a 12 month period, then the member has done so more than occasionally. However, this opinion is not absolute and the facts and circumstances should be considered in each case. The full opinion can be found on page 180 of a Regulation D Guidance document from the Federal Reserve Bank of Philadelphia. Note that the guidance document refers to footnote 5 which is now footnote 4 as the guidance predates some amendments to Reg D.

Finally, credit unions who offered linked savings deposits to cover overdrafts may find some of NAFCU’s older blogs helpful. You can find the blogs here, here, and here.

Laissez le bon temps rouler!

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New NCUA Examiner’s Guide

This past Friday, NCUA announced an update to its online Examiner’s Guide. We will be revising this guidance to identify any major changes such as the updated guidance on interest rate risk, risk-focused examinations, total analysis process and fidelity bond coverage. The new guide is searchable and interactive, yay technology!

Recently, we discussed the Closing Disclosure’s timing and delivery requirements in this blog post. Today, I’d like to take a look at when, for purposes of the Closing Disclosure, the credit union (creditor) may impose average charges on consumers instead of the actual amount received for particular settlement service(s).

General Rule

The general rule, located at 12 C.F.R. § 1026.19(f)(3)(i), is that a consumer cannot be charged more than the service provider actually received for any settlement service. However, under certain conditions, credit unions can impose an average charge instead of the actual amount a provider received for a particular service.

Exception

Section 1026.19(f)(3)(ii) of Regulation Z provides the conditions where a credit union may impose an average charge rather than the actual amount received by the settlement service provider for that service. A credit union may charge a consumer the average charge for a settlement service is the following conditions are satisfied:

The average charge is no more than the average amount paid for that service by or on behalf of all consumers and sellers for a class of transactions;

The credit union or settlement service provider defines the class of transactions based on an appropriate period of time, geographic area, and type of loan;

The credit union or settlement service provider uses the same average charge for every transaction within the defined class; and

The credit union or settlement service provider does not use an average charge:

a. For any type of insurance;

b. For any charge based on the loan amount or property value, such as transfer taxes; or

c. If doing so is otherwise prohibited by law, including state and local law as well.

The staff commentary in Regulation Z goes on to explain that if these conditions – above – are met, a credit union may develop representative samples of specific settlement costs for a particular class of transactions. This would allow the credit union to charge the average cost for that settlement service instead of the actual cost for such transactions. However, a credit union cannot use an average-charge program in a way that inflates the overall cost of settlement services.

For further information on average-charge pricing and the conditions above, the staff commentary is worth reviewing since it includes helpful clarifying information such as the definition of “class of transactions” and guidance and examples on the other conditions as well. Also, the staff commentary includes record retention requirements – “at least three years after any settlement for which that average charge was used” – for all documentation used to calculate the average charge for a particular class of transactions.

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NAFCU Regulatory Compliance Seminar. Plunge into the hottest credit union compliance topics, including detailed analyses of new and future regulations. Led by industry-leading experts, you'll get the scoop on what's hot now and what's coming up in credit union regulatory compliance.

November 22, 2013

After more than two years of research and testing, the Consumer Financial Protection Bureau (CFPB) issued – this past Wednesday – the long-anticipated Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) rule. Among several highlights from the rule, it provides for new, easier-to-use integrated disclosures, also known as the “Know Before You Owe” mortgage forms, that clearly lay out the terms of a mortgage for a homebuyer. The purposes of these new integrated disclosures are to provide improved consumer understanding, better comparison shopping, and avoid costly and unexpected surprises at the closing table.

Currently, credit unions are required to provide two separate disclosures – “early” TILA Statement and Good Faith Estimate (GFE) – within three business days after receiving a mortgage application. Under the final rule, these disclosures would be combined into one early disclosure document, the Loan Estimate, which borrowers must receive within three days after application.

Also, credit unions are currently required to provide two separate closing disclosures – final TILA Statement and HUD-1 Settlement Statement – three business days before closing on a loan. The final rule combines the final TILA and HUD-1 disclosures into one closing form, the Closing Disclosure, which borrowers must receive three days before closing.

The TILA/RESPA rule (and mandatory use of the new integrated forms) is set to take effect on August 1, 2015. While this extended implementation time is a win for credit unions – and something NAFCU pushed the CFPB for – it is important to note that the rule is 1,888 pages long and will require your credit union to make significant changes to how it conducts a mortgage transaction.

For a quick look at some of the other highlights from the rule, take a look at this message from Carrie Hunt, NAFCU’s Senior Vice President of Government Affairs/General Counsel. Also note, NAFCU will issue a Final Regulation providing a summary of the final rule. When it is available, you can find it here (NAFCU log-in required).

For further information on these new integrated mortgage disclosures, check out these CFPB resources:

On a lighter note, I’d love to share the group photo from NAFCU’s Regulatory Compliance Seminar that took place this past October in Nashville, Tennessee. It was a great crowd and we look forward to seeing you all next year in Baltimore, Maryland.

The current regulatory environment has placed an immense
burden on the credit union industry (I’ve been trying to kick-start the term “Reg-pocalypse”
with limited success) and the need to stay informed and up to date on
compliance issues is greater than ever. I don’t know about you, but I try to
avail myself of every opportunity to learn something, read
something, watch
something, or participate in
something that will help me understand current compliance issues faced by
credit unions. Which brings me to my shameless plug.

This year’s Regulatory Compliance Seminar has sold out. If you were unable to
register and won’t be able to join us in Nashville, Tennessee, fear not! To
accommodate the growing demand for the important information and education provided
at Regulatory Compliance Seminar, we're launching a Live Video Streaming option as a
pilot program which will allow you (and anyone from your credit union) to
attend virtually.

"Today, the Consumer Financial Protection Bureau (CFPB) issued a report detailing mortgage servicing problems at banks and nonbanks. The report also found that many nonbanks lack robust systems for ensuring they are following federal laws."

NAFCU's Regulatory Compliance Seminar. Today is the last day of savings for NAFCU's Regulatory Compliance Seminar - October 22-25 in Nashville, Tennessee. Need to convince someone at your credit union that you need to attend? I'm biased, of course, but pass along the Curriculum and the Faculty information and that should help!!

Hope to see you in Nashville! And, the seats are filling up fast - if you are planning on attending - register soon!

August 16, 2013

NCUA Board. Rick Metsger will be sworn into office as an NCUA Board member on August 23 in a private ceremony on Capitol Hill. NCUA General Counsel Michael McKenna will deliver the oath of office to Metsger, paving the way for Metsger’s participation in NCUA's September 12 Board meeting (there will not be an August meeting).

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Interchange Fees (Durbin Amendment). As we mentioned on August 1st, the Federal Reserve's interchange regulation was overturned by a Federal District Court leaving the interchange fee caps and the network exclusivity provisions in limbo. On Wednesday, Judge Richard Leon held a hearing which focused on whether Federal Reserve should write an Interim Final Rule.

For additional information on the next steps, check out Carrie Hunt's video recap:

Seminar versus School. We're often asked which of NAFCU's compliance conferences is right for a particular individual. Below are a few guidelines that should help. Of course, if you have any questions - please shoot me an email and I'll be happy to help.

Sessions provide a comprehensive foundation of the compliance environment facing credit unions. We walk through the nuts and bolts of various regulations - such as Regulation D, Regulation E and Regulation Z - and review topics such as Share Insurance, the E-SIGN Act and Privacy of Member Information. Bring your pencils (and your sharpener(s))!

Ideal for new compliance officers, those taking on more and more compliance responsibilities as well as those who are looking for a comprehensive "refresher" (School also provides 24 credits for existing NCCOs to complete their recertification).

Wednesday, July 31 - NAFCU Webcast - Annual BSA Compliance Update for Boards & Supervisory Committees (as with all NAFCU webcasts, this webcast will also be available on-demand allowing you to view at your CU's next board meeting or training session).

As we mentioned last week, NAFCU's Mortgage Rules webpage is the ultimate compliance resource center for the CFPB's mortgage rules. It is the "one-stop shop" for all of the NAFCU resources on these rules (NAFCU login required for member resources).

"Question: The qualified mortgage rule has limitations for points and fees depending on the size of the loan. Are third party fees such as appraisal fees and title insurance costs included in the restrictions on points and fees used in the qualified mortgage rule?

Answer: It depends on the type of third party fee. This is a complicated issue and you will have to look closely at the definition of “points and fees” as well as the commentary to determine whether or not the fees you charge are included and whether you exceed the limitations.

The final rule on ability to repay and qualified mortgages section 1026.43(e)(3) contains the restrictions on points and fees for qualified mortgages, which cross references the definition of “points and fees” contained in section 1026.32(b)(1), which reads:

“(b) Definitions. For purposes of this subpart, the following definitions apply:

(1) In connection with a closed-end credit transaction, points and fees means the following fees or charges that are known at or before consummation:

[…]

(iii) All items listed in § 1026.4(c)(7) (other than amounts held for future payment of taxes), unless:

(A) The charge is reasonable;

(B) The creditor receives no direct or indirect compensation in connection with the charge; and

(C) The charge is not paid to an affiliate of the creditor;” (Emphasis added.)

Both appraisal fees and title insurance are listed in section 1026.4(c)(7). The next step is to take a look at the official staff commentary from the final rule to section 1026.32(b)(1)(iii):

“Paragraph 32(b)(1)(iii).

1. Other charges. Section 1026.32(b)(1)(iii) defines points and fees to include all items listed in § 1026.4(c)(7), other than amounts held for the future payment of taxes, unless certain exclusions apply. An item listed in § 1026.4(c)(7) may be excluded from the points and fees calculation if the charge is reasonable; the creditor receives no direct or indirect compensation from the charge; and the charge is not paid to an affiliate of the creditor. For example, a reasonable fee paid by the consumer to an independent, third-party appraiser may be excluded from the points and fees calculation (assuming no compensation is paid to the creditor or its affiliate and no charge is paid to an affiliate). By contrast, a fee paid by the consumer for an appraisal performed by the creditor must be included in the calculation, even though the fee may be excluded from the finance charge if it is bona fide and reasonable in amount.” (Emphasis added.)

Thus, according to the definition of “points and fees” in section 1026.32(b)(1), the fees listed in section 1026.4(c)(7) would be considered “points and fees” for the purposes of the limitations on points and fees for qualified mortgages under section 1026.43(e)(3), unless they meet the conditions set out in section 1026.32(b)(1)(iii)."

NAFCU Members: This and many other detailed questions and answers on the CFPB's recent mortgage rules can be found on the mortgage rules webpage, as well as in recent issues of NAFCU's Compliance Monitor, available here for download (with NAFCU login). Don't forget to utilize these resources when you are conducting your research!

Non-members: Keep in mind that all of NAFCU’s webcasts (including NAFCU's CFPB Mortgage Reform Webcast Series) and conferences (including our Compliance School each March and our Compliance Seminar each October) are available to all credit unions – regardless of NAFCU membership. You do not even need to be affiliated with a credit union (we have attorneys, consultants, vendors and others attend regularly). The goal is to stay compliant with these increasingly complex issues, we hope you join us!

The role of compliance is changing and credit unions need to make sure their compliance function is three-dimensional

Credit unions need to establish a mortgage rule implementation team to manage the numerous changes

The actions of the CFPB and NCUA's Office of Consumer Protection have the potential to increase reputation risk at credit unions

Compliance officers need a seat at the table during product development and rollout

No one can do it alone - compliance officers should reach out to colleagues (both internal and at other credit unions) to ensure their CU is keeping up with all the new requirements

Congratulations to the Class of 2013 - it was truly a pleasure to spend the week examining the existing (and future) regulatory environment facing credit unions.

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Compliance Seminar. If you missed Compliance School, consider joining us in October for our Regulatory Compliance Seminar in Nashville where we'll be reviewing the latest compliance issues facing credit unions. We're building the agenda now, so if you have any suggestions of "must cover" topics - just shoot us an email.

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Earn Your NAFCU Certified Compliance Officer (NCCO) designation. Compliance School offers the ability for attendees to sit for four examinations and earn the NCCO designation. We also offer a self-study approach that allows anyone seeking a thorough understanding of the laws and regulations impacting credit union operations.

The NCCO exams track NAFCU's Credit Union Compliance GPS (the 2013 version) and interested persons can purchase all four exams and have them proctored by a colleague at the credit union. If you are interested in earning your NCCO exam, take a look at the following resources:

The FAQs include this one making it clear the NCCO designation is open to everyone:

Does my credit union or organization need to be a member of NAFCU for me to pursue the NCCO designation?

No, the NCCO program is open to everyone. Any credit union professional who desires to improve their overall comprehension and skills in the compliance arena may pursue the NCCO designation. Currently, there are CEOs, compliance officers, internal auditors, attorneys, lending officers, risk managers, vendors and numerous other individuals who have successfully passed the exams to become NCCOs.

*The GPS is not required to take the NCCO exams. However, it is strongly recommended as it serves as the primary text for the NCCO exams. In other words, the information needed to answer each exam question is covered in the GPS text. Additionally, keep in mind that the GPS is one per credit union (or organization). If your credit union sent one person to our 2013 Compliance School (or you've purchased the 2013 GPS), you would not need to purchase another copy.

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Or, budget to join us for our 2014 Regulatory Compliance School where you'll receive in-person training and the opportunity to sit for the NCCO exams!

February 13, 2013

The CFPB's 3507 pages of new mortgage regulations has everyone wondering where to start and how to best handle the new requirements. One of the best first steps is to determine which requirements apply to which types of mortgage loans. To help with this, NAFCU has put together the following Scope & Applicability Charts:

Non-NAFCU member registrants of NAFCU's Regulatory Compliance Seminar will receive access in the next week. If you sign-up for Seminarafter today, we'll get the charts to you within a week of your registration.

A Note on Sharing of Charts. We put a ton of time and effort into researching and creating these charts. And, we've made the accessible - in one way or another - to any credit union or organization that is interested. Please do not share these outside of your credit union. Of course, if you have any questions - just shoot me an email.

NAFCU Calls for Regulatory Relief. Yesterday morning, NAFCU sent a letter to Senate and House leaders calling for a five-point plan on providing regulatory relief for credit unions through administrative, capital, structural, operational and data security reforms. You can find the letter here. For additional details, check out the NAFCU Today.

January 29, 2013

I'm sure everyone has plenty of reading to do with the mortgage regulations (I sure do!), so here are a few small items that should be on your radar.

Potential
Credit Card Surcharges.
As part of a recent settlement, merchants gained the ability to surcharge for credit card purchases on January
27, 2013. While this
won’t directly impact your credit union, it has the potential to impact your
members. It is unknown how prevalent
merchant credit card surcharging will be, but it might be a good idea to put an
article in your credit union newsletter or some information on your
website. For more information, visit VISA’s
website – which includes a list of state laws that still
prohibit surcharges.

School & NCCO Exams. For those of you registered for School (or considering it), we've put together some FAQs on the process for taking the NAFCU Certified Compliance Officer (NCCO) exams. We'll also have a NCCO Exam orientation on Sunday, March 17th (optional) as well as quick NCCO Study Sessions at the end of each day to help you keen in on which issues to study for the Exams.

January 10, 2013

You've probably heard the rumors that the first of the CFPB's mortgage
regulations are expected to be released today. In anticipation of this, NAFCU sent another comment letter to the CFPB encouraging flexibility with regard to effective dates:

"NAFCU believes that the CFPB
does have the discretionary authority to provide much longer than the
publically stated 12 months for one or more of the final rules. While we
understand that Title XIV of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act) provides a set effective date for the agency’s
“qualified mortgages,” the CFPB can assert its greater discretionary
rulemaking, examination and supervisory authorities to determine that 12 months
is an inadequate period for financial institutions to effectively implement the
regulations. In fact, NAFCU believes that this short period could lead many
financial institutions to improperly implement the regulations, thus
diminishing the statutory purposes underlying the regulations.

Alternatively, the CFPB could
use its broad authority to consider the regulatory burden on small entities and
provide an extended effective date for all credit unions. As we have stated on
numerous occasions, Congress granted the CFPB this authority with the
understanding that small entities will be disproportionately affected by the
agency’s extensive
regulations issued pursuant to the Dodd-Frank Act. NAFCU believes that the
issue of the effective dates of these rules is well within the scope of the
agency’s discretionary authority related to small entities."

We hope the CFPB will seriously consider the differences between the big banks and nonbank mortgage lenders on one hand and credit unions and community banks on the other. Both in terms of whose actions lead to Dodd-Frank and which should have the obligation to restructure their entire mortgage operations within a short period of time.

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Field Hearings. Today marks the first of two planned Field Hearings on mortgages that were announced by the CFPB. Today's hearing will be at 11 a.m. in Baltimore, Maryland (at Westminster Hall and Burying Ground). The second will be January 17th in Atlanta, Georgia (hopefully at a less foreboding location). According to the announcements, each field hearing will feature remarks from CFPB Director Richard Cordray, as well as testimony from consumer groups, industry representatives, and members of the public.

Additionally, if the past is any indicator - the CFPB will be announcing their final rules either prior to the field hearings or directly following the hearings. Stay tuned.

*** Update ***

Qualified Mortgage Final Rule - (Updated at 7:00 a.m. on 01/10/13). Early this morning (12:01 a.m.), the CFPB announced it has finalized the qualified mortgages regulation. This is also known as the ability-to-repay mortgage rule. You can find information on the final rule below.

In true CFPB fashion, the actual regulation isn't available yet - but will be posted on their regulations page later today. An interesting way to control the news reporting, isn't it? Give out just the highlights from the CFPB's perspective and don't release the details. By the time the details (and the associated burdens) come out, the CFPB's message is already out and through the news cycle.

For more, check out the NAFCU Today. Of course, NAFCU's Regulatory Affairs team will be preparing a Final Regulation for NAFCU memebers.

January 03, 2013

As 2013 swings into full force, I wanted to take a minute to highlight some of NAFCU's compliance products and services that might help make 2013 a little bit easier.

Reminder: All of NAFCU's products and services - including conferences and webcasts - are available to everyone. You do not need to be a NAFCU member to attend. You do not even need to be affiliated with a credit union (we have attorneys, consultants, vendors and others attend regularly). Of course, NAFCU members receive preferred pricing on all products and services. But, the regulations and laws apply to everyone - so we allow everyone the opportunity to attend and learn. The goal is to comply regardless of whether your credit union is affiliated with NAFCU or not.

NAFCU's Credit Union Compliance GPS. Our completely electronic compliance manual is moving into its third year. To
celebrate, we are offering a “Buy the 2012 GPS, Get the 2013 GPS Free” promotion. The promotion is easy. Buy the 2012 GPS now and we’ll make sure you get a free
copy of the 2013 GPS when it is available. The 2013 GPS will be available in
mid-March for NAFCU’s Regulatory
Compliance School. After
school, we’ll email a notice to anyone who bought the 2012 GPS after January 1, 2013, letting them
know how they can download the 2013 GPS.

Remember:One purchase of the GPS provides access to your entire credit union (or organization). Additionally, all attendees of NAFCU's 2013 Regulatory Compliance School will receive free access to the 2013 GPS (so those credit unions sending someone to School don't need to buy).

What is the difference between School & Seminar? School provides attendees with a strong foundation of the regulations and laws that credit unions need to follow in order to operate. We walk through topics such as Credit Union Bylaws, Share Insurance, the E-SIGN Act, Regulation Z and many others. School is also the perfect location to obtain your NAFCU Certified Compliance Officer (NCCO) designation as the exams are given on-site the day after the material is covered.

While School's schedule and focus is similar year to year, Seminar's content depends on the regulatory environment that credit unions are facing. Seminar features "Hot Topics" and "Regulatory Updates" as well as full sessions on new or changed regulations (2012 included sessions on Remittances, Mortgage Servicing, TILA/RESPA Integrated Disclosures, and more). Seminar is also the perfect place to earn credits to renew your NCCO (attendance at Seminar provides 24 CEUs - enough to recertify for 2 years).

Bonus for Registrations Before January 31st: Register for any of NAFCU's conferences - including School & Seminar - using the code "NEWYEAR" by January 31, 2013 and save an additional $100 off the registration fee. This $100 is in addition to the early-bird rates (School's early-bird rate ends January 11th).

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NAFCU's Upcoming Webcasts. NAFCU also offers webcasts on numerous issues - including many focusing on the evolving regulatory environment. For example, we have 3 webcasts slated for January:

NAFCU's Online Training Program. NAFCU also offers a convenient option for training Board and Supervisory Committee members and New Employees. Our Online Training Program features 19 modules (14 for Board/Supervisory members and 5 for new employees) for unlimited access by your credit union for one year. Included are modules on BSA and Financial Literacy to help your credit union meet NCUA's training expectations. The program also comes with transcripts and training documents to help you document your Board's training.

Purchase of the Online Training Program comes with access to all 19 modules (as well as any new modules added) for one year - all at one price that varies based on your credit union's assets.

October 02, 2012

With all the various mortgage proposals from the CFPB, it can be quite hard to track the proposals - including the comment deadlines. We've highlighted the actual Federal Register notices in a past blog post (now updated with the Mortgage Servicing proposals), but we also wanted to highlight the comment deadlines for you as it is extremely important that credit unions make their voices heard to the CFPB about the magnitude of these proposed changes and, more specifically, the costs and operational changes that the proposals would require.

Comment Deadlines. Below are the comment deadlines for submitting comments to the CFPB.

September 7, 2012: High-Cost/HOEPA Proposal

October 9, 2012: Mortgage Servicing Proposals

October 15, 2012: Mortgage Loan Originator Proposal

October 15, 2012: Higher-Risk Appraisal Proposal

October 15, 2012: Regulation B Appraisal Proposal

November 6, 2012: TILA/RESPA Integrated Disclosure Proposal

November 6, 2012: Proposed Change to Definition of Finance Charge

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NAFCU Regulatory Alerts. NAFCU's regulatory affairs team has produced Regulatory Alerts for NAFCU members on each of these proposals. You can view the Regulatory Alerts by clicking here (or download the PDFs directly from the links below):

NAFCU Webcasts. In addition to the alerts above, we are also explaining the proposed rules in webcasts. Below are two that may be of interest:

Inside the CFPB's Mortgage Proposals - On-Demand Webcast - Special 3-hour webcast which highlights the Mortgage Servicing proposals, the High-Cost/HOEPA proposal as well as the TILA/RESPA Integrated Disclosure proposal (including a thorough discussion of how the proposed change to the definition of "finance charge" will impact your credit union).

We'll also be discussing the TILA/RESPA Integrated Disclosures and the Mortgage Servicing Disclosures at our 2012 Regulatory Compliance Seminar in Seattle. Remember, NAFCU's webcasts and conferences are open to everyone - regardless of NAFCU membership.

NAFCU's October Compliance Monitor. NAFCU Members: Our October Compliance Monitor is now available for download. This issue includes lengthy articles on the "high-cost" mortgage proposal (including a discussion of the potential change to the definition of "finance charge") and the CFPB's mortgage servicing proposals. We've also attached a six-page chart which helps organize the 20 new notices included in the mortgage servicing proposals. Happy reading!

September 26, 2012

Shameless Plug: We'll be upfront here - this blog post will discuss NAFCU's upcoming compliance conferences. With all the proposed and final rules from multiple agencies (and specifically the CFPB), it is as important as ever to get in-person training and, more importantly, network with your colleagues (almost 200 signed up for Seminar already) who will prove to be useful sounding boards over the next couple of years.

NAFCU's 2012 Regulatory Compliance Seminar - Seattle, Washington - October 23-26. This year's Regulatory Compliance Seminar is chock-full of great topics - and great speakers. I'm just going to provide bullets on the topics and you can see for yourself the richness of the content:

NAFCU's 2013 Regulatory Compliance School - Gaylord National Harbor, MD - March 18-23. 2013. Our 2013 Regulatory Compliance School will be held next March and is a great place for new compliance officers (or those who added more compliance to their job functions) to gain a comprehensive overview of the regulations that impact credit union operations. It is also the best place to study for an take the NAFCU Certified Compliance Officer (NCCO) exams to earn your NCCO. Attendance at 2013 School will also come with the 2013 NAFCU Credit Union Compliance GPS (which will be available prior to 2013 School). Registration is currently open and additional details will be available in the near future.

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NAFCU's 2013 Regulatory Compliance Seminar - Gaylord Opryland Resort - Nashville, TN - October 22-25, 2013. If you can't make it to our 2012 Regulatory Compliance Seminar, plan now for 2013 in Nashville, Tennessee (and about a 7 minute walk from the Grand Ole Opry). Registration for 2013 Seminar will open in the upcoming weeks so keep an eye out.

September 07, 2012

With the various mortgage proposals from the CFPB, I thought a good Friday blog post would be one that linked to the various proposals in the Federal Register so that credit unions had the proposed rules in one place.

Update (10/01): The Mortgage Servicing proposals can be found here (Reg Z) and here (Reg X). It doesn't appear that the Mortgage Servicing proposed rules have been published in the Federal Register yet (the comment period ends October 7th for those proposals). Those proposals can be found here: Reg Z and Reg X. Our August 23rd blog post also has a recap of our mortgage servicing blog posts to date.

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NAFCU Seminar. We'll be discussing both of the Mortgage Servicing proposals as well as the TILA/RESPA Integrated Mortgage Disclosures in breakout sessions in Seattle (October 23-26th). We'll also be discussing the other proposals in our CFPB Update sessions.

On-Demand Webcast. If you missed the 3-hour marathon webcast on Wednesday, you can still purchase the on-demand version in order to get a detailed update of the CFPB's proposals on mortgage servicing and high-cost mortgages (including the impact on HELOCs). I also provided an overview of the proposed Integrated Disclosures.

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Football Season. I'll admit we've been a little slow on the football talk lately. With that being said: Go Blue!

August 15, 2012

Yesterday, we looked at the first three proposed changes coming from the CFPB's mortgage servicing proposals. Those three changes will amend Regulation Z (TILA). There are also six proposed changes that will change Regulation X (RESPA). This blog post will cover those first three RESPA changes and includes links to the preamble, regulatory text, official staff commentary and any model forms.

Note: Of course, when we say "nine proposed changes" it is with regard to the major issues. As with any proposed regulation, there will be numerous "smaller", technical changes that credit unions will need to review, analyze and implement. As I like to say, the regulatory burden is in the details.

Regulation X (RESPA)

(4) Force-placed insurance (RESPA proposal): As required by the Dodd-Frank Act, servicers would not be permitted to charge a borrower for force-placed insurance coverage unless the servicer has a reasonable basis to believe the borrower has failed to maintain hazard insurance and has provided required notices. One notice to the borrower would be required at least 45 days before charging for forced-place insurance coverage, and a second notice would be required no earlier than 30 days after the first notice. The proposal contains model forms that servicers could use. If a borrower provides proof of hazard insurance coverage, then the servicer would be required to cancel any force-placed insurance policy and refund any premiums paid for periods in which the borrower’s policy was in place. In addition, if a servicer makes payments for hazard insurance from a borrower’s escrow account, a servicer would be required to continue those payments rather than force-placing a separate policy, even if there is insufficient money in the escrow account. The rule would also provide that charges related to forced place insurance (other than those subject to State regulation as the business of insurance or authorized by federal law for flood insurance) must relate to a service that was actually performed. Additionally, such charges would have to bear a reasonable relationship to the servicer’s cost of providing the service.

(5) Error resolution and information requests (RESPA proposal): Pursuant to the Dodd-Frank Act, servicers would be required to meet certain procedural requirements for responding to information requests or complaints of errors. The proposal defines specific types of claims which constitute an error, such as a claim that the servicer misapplied a payment or assessed an improper fee. A borrower could assert an error either orally or in writing. Servicers could designate a specific phone number and address for borrowers to use. Servicers would be required to acknowledge the request or complaint within five days. They would have to correct or respond to the borrower with the results of the investigation, generally within 30 to 45 days. Further, servicers generally would be required to acknowledge borrower requests for information and either provide the information or explain why the information is not available within a similar amount of time. A servicer would not be required to delay a scheduled foreclosure sale to consider a notice of error unless the error relates to the servicer’s improperly proceeding with a foreclosure sale during a borrower’s evaluation for alternatives to foreclosure.

(6) Information management policies and procedures (RESPA proposal): Servicers would be required to establish reasonable information management policies and procedures. The reasonableness of a servicer’s policies and procedures would take into account the servicer’s size, scope, and nature of its operations. A servicer’s policies and procedures would satisfy the rule if the servicer regularly achieves the document retention and servicing file requirements, as well as certain objectives specified in the rule. Examples of such objectives include providing accurate and timely information to borrowers and the courts or enabling service personnel to have prompt access to documents and information submitted in connection with loss mitigation applications. In addition, a servicer must retain records relating to each mortgage until one year after the mortgage is discharged or servicing is transferred and must create a mortgage servicing file for each loan containing certain specified documents and information.

August 06, 2012

The CFPB has started to regularly provide snippets of consumers they've helped following a complaint. The CFPB has been posting these on its blog using the tag - Consumer Stories.

One of these stories features Greg from Michigan. And here is the story posted on the website:

"Greg, a 39-year-old insurance adjuster from Michigan, whose credit rating was damaged after a bank failed to tell him that an account with which he was associated was in arrears.

Greg added his name to his 71-year-old mother’s checking account after he helped her move into an assisted living facility. Six months passed without Greg getting any statements or hearing from the bank. Little did he know, however, that his mother had written a check and the account was racking up big fees because its balance had fallen below zero. He found out about it when he checked his credit report and saw that he owed a collection agency $469.

Greg paid the bill but his credit was harmed and he says the bank wouldn’t help. After the CFPB got involved, the bank apologized for their error, called off the debt collector, and had Greg’s negative credit record removed."

Now, you may have the following questions (and I'm sure there are many more):

Where were the periodic statements being sent?

Did Greg change the mailing address when he helped move his mother into an assisted living facility?

Did Greg change the mailing address for the account when he added himself to the account?

Was the mother receiving any information or correspondence from the bank?

If Greg wasn't receiving any information from the bank, did he try to contact the bank?

Did Greg try to access the account online?

Did his mother tell him about the check she wrote (remember they are both joint on the account)?

How does removing the negative credit record from Greg's account (even though it was accurate) improve the reliability of the credit reporting system? Aren't creditors required to report accurately?

Unfortunately, the CFPB has provided only a portion of the story. The part that makes Greg look innocent and the bank at fault. Of course, this might actually be true but there is no way to know without additional information. And, it is quite sad to see the CFPB pushing out these partial stories trying to paint financial institutions as cold-hearted when there is most likely plenty more to the story. So, to the CFPB - where is the rest of the story?

August 02, 2012

CFPB Takeaways. Last week was NAFCU's 45th Annual Conference at the Gaylord Opryland in Nashville, Tennessee. It was a great event with tons of educational content - including my Friday afternoon talk on "Living with the CFPB." In preparation for the presentation, I put together two "takeaways" for attendees. I wanted to share those with blog readers as they might serve as useful information for a future management or Board meeting.

This two-pager highlights the regulations that transferred to the CFPB and provides examples of which credit union activities might be covered by those regulations.

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NAFCU's 2012 Regulatory Compliance Seminar. The agenda for our 2012 Seminar - in Seattle, Washington - is starting to solidify. Of course, we'll have a couple of "update" sessions where we'll discuss the latest from the regulators as I'm pretty sure they will have a few more surprises for us this fall. We'll do our best to incorporate those proposals and final rules into the program.

July 17, 2012

CFPB Regulatory Agenda. Yesterday, the CFPB posted its Semiannual Regulatory Agenda - for spring 2012. The previous Semiannual Regulatory Agenda was released in February 2012. The latest release follows the same format and includes a listing of regulations in the various rulemaking stages: prerule stage, proposed rule stage, final rule stage, long-term actions and completed actions.

Below is a listing of the various future regulations - organized by rulemaking stage. Keep in mind the agenda is current as of April 13, 2012 and the CFPB has taken numerous actions since putting this agenda together.

Only 27 potential rulemakings!! The Regulatory Agenda also includes a short summary of each rulemaking that is useful for providing a quick overview of what will be covered by the rulemaking. However, as last Monday's proposed rules show - a short summary doesn't do much when the proposals are 1099 pages and 293 pages.

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NAFCU's 2012 Regulatory Compliance Seminar. Luckily, you don't have to read and understand all 27 potential rulemakings on your own. We'll be covering quite a few of them at our 2012 Regulatory Compliance Seminar in Seattle, Washington - October 23-26.

The program-at-a-glance is available here (and we'll be including additional sessions as the proposals continue to flow). We already have a session on the TILA/RESPA mortgage disclosures, the upcoming mortgage servicing proposal (including the periodic statement requirement) as well as a session on the remittances final rule. Detailed session descriptions can be found here.

NCUA Grants. Low-income credit unions have until tomorrow - June 29th - to apply for technical assistance grants and reduced-rate loans. Remember, the grants can be used for staff, official and director training. If you are a low-income credit union, be sure to review the application process soon.

Current Issues in Credit Unions. I had the pleasure of being a guest on Episode 72 of the Current Issues in Credit Unions podcast. We talked about the CFPB; CUSOs; OFAC; Twitter and a few other items that might be interest.

Additionally, NAFCU will be hosting a live taping of Current Issues in Credit Unions podcast from our Regulatory Compliance Seminar (October 23-26 in Seattle). We hosted the first live podcast last year in Orlando (Episode 64) and we are very glad that Rob Rutkowski and Katherine Weber will be back live for the podcast in Seattle.

May 23, 2012

Prepaid Cards Field Hearing. The CFPB recently announced a field hearing on prepaid cards - which will be held today in Durham, North Carolina starting at 12:00 p.m. EDT. The CFPB's blog indicates to check back if you want to view the live broadcast. [As of now, there is no link to the feed. But, past live feeds were available here if you want to try around noon].

Upcoming Prepaid Card Regulation. In conjunction with today's field hearing, the CFPB announced its intent to regulate the prepaid card market. The CFPB announced an Advanced Notice of Proposed Rulemaking (ANPR) which is an initial step in the rulemaking process and is usually one where an agency gathers information about the market - prepaid cards in this situation - in anticipation of future regulation.

By the way - it is good to see the CFPB's website is capable of having a search bar! I can't wait until they upgrade to the third version of their website and provide a search bar to help credit unions and other entities find the information they need.

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NAFCU Webcasts. NAFCU has a full slate of webcasts for June. Remember, all of NAFCU's events and conferences are open to anyone - this includes webcasts.

My next professional goal is to become a NAFCU Certified Compliance Officer. I am also working on creating an enterprise risk management “think tank” comprised of other credit union professionals and would like to eventually head up a risk management team."

Katey called very excited yesterday to inform me she had successfully passed all her NCCO exams and was officially an NCCO! And, she has already had a couple of meetings with other professionals on enterprise risk management. Great job Katey!

Life is a Zoo. It has been a bit since the last "married life" update - we just hit the six-month mark a couple weeks and it seems to have flown by. We had family in town the past two weekends and had a chance to slow down - including a visit to the National Zoo.

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